BASF to cut 750 N American jobs in 2nd restructuring wave

17 March 2004 12:16  [Source: ICIS news]

LONDON (CNI)--The second phase of BASF's restructuring programme will result in the loss of another 750 jobs in North America, chairman Jurgen Hambrecht said Wednesday.

In outlining the German chemicals and energy group's 2003 financial results, Hambrecht said this phase involved plant closures and optimisation of the product portfolio over the next two years. It is aimed at reducing fixed costs by $150m, with half to be achieved this year.

The first phase of North American restructuring has largely been completed, said Hambrecht, and would result in cost savings of $100m by the end of this year. BASF announced the two-phase plan in August last year to deliver total fixed cost savings of at least $250m by 2006.

About 1000 jobs were lost under phase I, and some 400 of the 750 phase II jobs have already been eliminated. BASF employs a total of about 12 500 people in the US, Canada and Mexico.

Hambrecht said 40 projects had been identified in the second phase, with half currently being implemented including:

• Closure of the South Brunswick, New Jersey production site and the transfer of Styropor expandable polystyrene (EPS) output to Altamira, Mexico.
• Formation of a new 50:50 joint venture with Akzo Nobel to produce chilates in Lima, Ohio.
• Retrofitting of an unused vitamins plant at Wyandotte, Michigan to produce amino resins.

"Based on our current expectations, the implementation of phase II will reduce our workforce in North America by a further 750 positions," said Hambrecht.

BASF did not specify the remaining phase II cutback projects or identify individual plants which might be closed or where capacity could be reduced.

The group has major North American sites at Geismar, Louisiana, Port Arthur and Freeport in Texas, Wyandotte in Michigan and Altamira, Mexico.

In addition to its restructuring programme, BASF is targetting long-term savings by relocating its regional headquarters from Mount Olive, New Jersey to smaller offices in Florham Park, New Jersey, by the end of the third quarter. BASF said it planned to sell the Mount Olive building, which has been underutilised since the sale of Knoll Pharmaceuticals in 2001.

BASF's operations in the North American Free Trade Area (Nafta) suffered a 56% slump to Euro10m in operating profits last year after Euro36m in special charges for the first phase of restructuring. Sales fell 9% to Euro7.2bn due to the weak dollar.

Hambrecht explained that high raw material costs resulted in lower margins. He added that BASF had been only partially successful in implementing product price rises, as the North American market continued to suffer from overcapacity for some products.

By: Neil Sinclair
+44 20 8652 3214

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